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Financial planner/adviser question

Old 11-08-2010, 06:03 PM
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Default Financial planner/adviser question

What would one look for when seeking their services? What should one stay away from? And, is there a point in life where their services should be sought, such as age, size of one's savings/investments relative to income?
Old 11-08-2010, 06:30 PM
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i have some friends that used an adviser when they find themselves with a lot of extra income for a few months...... they assume that the new condition was permanent and not temporary.... they went over every little financial and economic aspect of their life and their expectations for their future...
he suggested to use some liquid savings to pay off a car that had a loan with an 7% and also suggested to put a ton of money on some retirement type of account...
well shortly after.. everything changed, one of them lost his job and had to start living of CC for a while because they didn't have the liquid anymore... on top of that they decided to start their own business but did not have the money, so they had to get a second mortgage over their hose but could not touch the money they sent to retirement...

so... I know that it was not the financial adviser fault what happened to them, but I would have acted differently...
just my 2 cents...
Old 11-08-2010, 06:41 PM
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Ask them to show you how much of their income is from their own investments, and how much from commissions and fees.
Old 11-08-2010, 06:53 PM
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The absolute 100% most important thing you can do is to call your state securities regulator and make sure they are properly registered for the products and services they offer. Find your regulator at the states' association, the North American Securities Administrators Association (NASAA). http://www.nasaa.org/QuickLinks/Cont...rRegulator.cfm

Would you trust your health to an unlicensed physician, of course not. Then why trust your finances to an unregistered adviser who, by being unregistered, is already operation in violation of the law? Your state regulator can also provide you with the adviser's "disclosure history", which would generally include any customer complaints they've had, any internal investigations / terminations by firms they've worked for, and any regulatory actions by state regulators or the SEC.

Ask whoever answers the phone at the office that you want to do a "CRD" check on the adviser. All you need is the individual's name. In most states, an adviser's registration and disclosure history is all public record.

Don't mean to sound like a commercial, but trust me I know this. If any adviser is a fraud, checking with the regulators before investing with them will save your bacon (and chee$e).
Old 11-08-2010, 07:05 PM
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they invest your money:

Look for a track record. what have they managed and what did it earn? This approach may keep you away from the next Warren Buffet who just started two years ago but then again there have not been too many Warren Buffets.

Do they have one investing model? Or do they invest your money in a way that fits your age, income, and current net worth?

Do they work for commission on trades (not good)? Charge a % of the amount you give to them (ok)? Or charge a flat fee (can be ok)?

Are they registered?

Part of a big company or a one person office? If big company, do they have to sell the products offered by the company?



Or, do they just give advise? It is tougher to find out if their advise has been good over the past 5-10 years.
Old 11-08-2010, 07:33 PM
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Just before I retired, I started "interviewing" financial planners. One was recommended by our union, one by my GF and a third by a friend who retired before I did.

The union recommended one was used by my co-worker friend and he promptly changed after a year when that person lost about $40K for him. I eventually went with my friend's new guy after talking to him and he sounded very positive and gave me numbers that seemed realistic. Today, my investment is up $50K in this bad economy.

My GF's investment guy isn't doing to well for her and her friend who she recommended to. I'm glad I didn't go with him. It just didn't sound right.

Good luck.
Old 11-09-2010, 04:32 AM
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www.altrius.com
No affiliation except he is my guy. I like his stategy.
Old 11-09-2010, 04:43 AM
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Might check these guys out:

http://lplfinancial.lpl.com/
Old 11-09-2010, 05:13 AM
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I've had a planner who made his money on commissions- fired him after a short time due to a string of recommendations that would have benefited him, but not me.

I went with a planner who charges a flat fee. Things to look for:
- does the planner have a spotless FINRA record? Don't settle for any less. (A financial planner might not be in the FINRA database, but nearly every one I've talked to has been).
http://www.finra.org/Investors/Tools...s/BrokerCheck/
- is financial planning the planner's primary source of income and has he/she been at it long enough to demonstrate commitment?
- does the planner actually listen to what you have to say?
- do you feel comfortable with the planner? Trust your gut.
- do you know anyone who uses the same planner? If so, are they people whose financial judgement you trust? Are they happy with the advisor?
- my neighbors and 35-year friends still use the same planner I fired. Love my neighbors, wouldn't take any financial advise from them.
Old 11-09-2010, 05:16 AM
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Make sure the guy is a REGISTERED INVESTMENT ADVISOR first. Brokers have no legal obligation to ACT IN YOUR BEST INTEREST. Very important.
Old 11-09-2010, 07:42 AM
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I have been in the Financial Services Business for over 15 years since leaving college ( Institutional trader) and i STILL use a advisor. To many things to keep up with and on top of to do it correctly.

Some important things to look for:

Make sure he charges a fee(ex 1% of assets/year). This fee somewhat depends on total assets but don't expect to pay less than 1% unless you have $2-5M, and even then you are still talking around 80basis points. Don't pay over 1.25% that starts to hurt your returns expecially in this low yield environment and he is overcharging you. Do not go with a transaction based fee model...Churn and earn mentality.

Make sure your advisor uses a reliable and secure platform. A third party should always be the custodian of your account. My guy uses Schwab as a platform. HE has total trading authority in my account however obviously he cannot withdraw or add funds. Everything can be viewed online and email confirms are received. Fidelity/Vanguard/Schwab.etc..all good platforms. Just make sure your statement doesn't come printed out by him on his own stationary....

Also check FINRA's website to make sure there haven't been any issues with the person. Finra Broker check

http://www.finra.org/Investors/Tools...s/BrokerCheck/

Not all advisors are registered here but if they aren't then they will be registered with your state, so check there as well.


Decide how much hand holding you need. My guy is in Atlanta and I live in Philly. I have never met him in person or walked into his office, but I could care less. He does a outstancing job especially in this tough market. We talk 1-2x per week and bounce ideas off each other. I know that is definitely not the typical situation, but again I'm a "qualified" investor and have different needs and objectives than the typical person.
Old 11-09-2010, 07:49 AM
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Originally Posted by BottomPicker View Post
Make sure the guy is a REGISTERED INVESTMENT ADVISOR first. Brokers have no legal obligation to ACT IN YOUR BEST INTEREST. Very important.
Bottom picker you are not correct in your statement. While there are many gray areas both a broker and a RIA have a fiduciary responsibility to the client. I'm not trying to start a fight however all financial professionals have to understand their clients needs before they start investing otherwise be prepared to be sued if things go south. As in any profession there are outstanding people and sub par individuals.

That's why I am on the institutional side, everybody is a big boy and responsible for themselves.
Old 11-09-2010, 07:51 AM
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I am a fee-only Registered Investment Advisor. There is a lot of good information above. The best person for you to work with depends on what your real needs are and your personality type. My practice is very focused on a certain niche, and I feel I can bring a lot of value to the table. Not everyone needs the skills I have.

My licensing does not allow me to market outside of states I am licensed in. If you want to PM me, I'd be happy to ask you a few questions to point you in the right direction and make sure you don't get screwed over.
Old 11-09-2010, 07:54 AM
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Originally Posted by bjm9818 View Post
Bottom picker you are not correct in your statement. While there are many gray areas both a broker and a RIA have a fiduciary responsibility to the client. I'm not trying to start a fight however all financial professionals have to understand their clients needs before they start investing otherwise be prepared to be sued if things go south. As in any profession there are outstanding people and sub par individuals.

That's why I am on the institutional side, everybody is a big boy and responsible for themselves.
Sorry but Bottom Picker is correct. Traditional brokers are exempt from the Investment Advisers Act of 1940 which imposes the Fiduciary level of responsibility. Brokers are only subject to a suitability requirement and will fight hard not to take on the level of a Fiduciary.
Old 11-09-2010, 07:58 AM
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Being a former hedge fund mgr , I'm a "2 and 20" guy. Im retired now.... I will tell you the truth....there is NO SUCH thing as an investment adviser.
He is going to sell you product (select funds) that he is selling for HIS benefit, not yours, if for some reason you DO make money on them, its because he made a TON more. Dont be fooled by the financial community, Im a part of it and its mostly all a scam.

My recommendation is you stay AWAY from muni's and equities. Get out of your 401K if it doesnt offer a cash only position. Stay below FDIC limits in your accounts, and buy Treasuries. Check out Treasurydirect.gov.... the trick in todays economy is NOT to make a return ON your money, but to GET RETURN OF YOUR MONEY.

Good luck, leave it in T's and go fishing and sleep like a baby.
Old 11-09-2010, 08:17 AM
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Thanks for the replies. Sprockets, PM sent.
Old 11-09-2010, 08:36 AM
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Originally Posted by Capt.B View Post
Being a former hedge fund mgr , I'm a "2 and 20" guy. Im retired now.... I will tell you the truth....there is NO SUCH thing as an investment adviser.
He is going to sell you product (select funds) that he is selling for HIS benefit, not yours, if for some reason you DO make money on them, its because he made a TON more. Dont be fooled by the financial community, Im a part of it and its mostly all a scam.

My recommendation is you stay AWAY from muni's and equities. Get out of your 401K if it doesnt offer a cash only position. Stay below FDIC limits in your accounts, and buy Treasuries. Check out Treasurydirect.gov.... the trick in todays economy is NOT to make a return ON your money, but to GET RETURN OF YOUR MONEY.

Good luck, leave it in T's and go fishing and sleep like a baby.
That is one of the worst post with the most mis information I have read in a long time. I would never recommend Treasuries for anyone in the first half of their working life. Maybe start to sprinkle a few in as they progress into the second half of their working life. Just sounds like sour grapes from a former hedge fund manager that got his a** handed to him in a down market.....probably why he is now considered former.
Old 11-09-2010, 09:35 AM
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Thanks Sprockets. I didn't have time to elaborate on my comment at the time, but your explanation was excellent. Also most brokers are not CFA's (Chartered Financial Analysts). These are people with professional certification in portfolio management similar to a CPA or attorney. Just FYI, Certified Financial Planner is not the same.

Track records are important to check, but how does the fund's investment style match with the benchmark. You can game the benchmarks, so there is no clear, precise answer on track records. PMs change, style changes, yadda yadda yadda. Data mining is dangerous. I split my dough between active managers and index funds. Many of the big outfits use "Models" for asset allocation. Once again...data mining, or cover for bad decisions.

I use my tax accountant for some issues, but do plenty of my own asset allocation and cash flow projections for retirement. You have to be aware of the various pitfalls with the planning and asset allocation models. You can be lulled into them, thinking that they are the answer. I use this all the time in the speeches I give: Remember what Clint Eastwood said? ....A man has to know his limitations. A guy off the street does 1 trade that wins big and he thinks he's a genius. Do it for 15 straight years. It's all relative to the risk you took...what's the potential downside??
Old 11-09-2010, 09:42 AM
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I have one word of advice. Listen to sprockets.
Old 11-09-2010, 10:37 AM
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Originally Posted by LI Sound Grunt View Post
I have one word of advice. Listen to sprockets.
Thanks LI. I help out when I can.

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